International Journal of Policy Studies Vol.7, No.2, 2016 A Critical Study of Canada Social Transfer as an Instrument of Social Policy Devi Roy Jawaharlal Nehru University, India Abstract The expansion of the federal role in social policy led to the development of a Canadian welfare state. The federal government funds the majority of social programmes through the mechanisms of Canada Health Transfer (CHT) and Canada Social Transfer (CST). The CST is the federal transfer payment programme in support of education, social assistance and social services, which includes early childhood development and early learning and childcare. The CST was initially combined with the CHT in a programme called the Canada Health and Social Transfer (CHST) 1995. It was made independent from the Canada Health and Social Transfer programme on April 1, 2004, to allow for greater accountability and transparency in the social sector areas. As CHST was bifurcated into CHT and CST, the CHT is the largest major transfer and it provides funding for healthcare and supports the principles of the Canada Health Act to provinces and territories. The present paper attempts to analyse that CST is the primary federal contribution in Canada to provincial and territorial social programmes and is also an instrument of social policy. The federal transfer is an important instrument for the provinces and the territories for a social change. For the implementation of the policy, fund plays a crucial role. So from this paper tries to analyse the Canada Social Transfer as a key instrument of the social policy of 10 provinces and 3 territories. It has taken data of one decade from 2005 to 2015. Key Words: Canada Health and Social Transfer, Federal Transfer, Social Programmes INTRODUCTION The research paper can be broadly classified into four sections. In the first section, an attempt is made to define the social policy. It further highlights the Canada Social Transfer (CST). The subsequent section deals with the evolution of social transfers in Canada. The section focuses on social transfer payments that have evolved from cost sharing programmes to block funding transfers. The next section focuses on the bifurcation of CHST into CST and CHT. The federal cash transfer through CST to all provinces and territories has been analysed and has taken data of one decade from 2005 to 2015.The last section concludes that despite CST as an instrument of social policy, the funding provided through CST of one decade as 36 Devi Roy compared to CHT is insufficient in the areas of social assistance, social services, childcare and early childhood education, and post-secondary education. SOCIAL POLICY Throughout the history of the Canadian state, the federal and provincial governments have designed different social policies according to different intergovernmental rules and processes. In the 1950s and 1960s, the federal government used shared-cost programmes to help the provinces to expand the social programmes (health care, post-secondary education, social assistance and welfare services) that met national objectives (Banting 2008). Shared-cost programmes mean the federal government’s financial support to social programmes operated by provincial governments on specific terms and conditions. Each government makes separate decisions: the federal government decides when, what and how to support provincial programs and each provincial government must decide whether to accept the money and the terms (Banting 2008) or not. According to Hicks (2008), a social policy can be defined broadly to include income support such as seniors' benefits, unemployment insurance and tax credits, employment and labour programming, education, health and social housing, and social services. Marshall Watson (2011) stated that: "Social policy focuses on the systematic evaluation and response to social changes and needs. It refers to the decisions taken by the government concerning goals for society and the means of achieving them." Canada Social Transfer The federal government of Canada provides major financial support to provincial and territorial governments to support them in the provision of programmes and services. There are four main transfer programmes: (1) the Canada Health Transfer (CHT)1, (2) the Canada Social Transfer (CST), (3) Equalization2, and (4) Territorial Formula Financing (TFF)3. The Canada Social Transfer (CST) is the primary source of federal funding in Canada that supports provincial and territorial social programmes, specifically, post-secondary education, social assistance and social services, and programmes for children. Federal legislation dictates only one condition that the provinces and territories are required to meet to receive CST funding: to ensure that there is no minimum residency period required before persons are eligible to receive social assistance (Gauthier 2012 ).The Department of Finance (2010)stated that: A Critical Study of Canada Social Transfer as an Instrument of Social Policy 37 “The Canada Social Transfer (CST) is the primary federal contribution in Canada to provincial and territorial social programs related to post-secondary education (PSE), social assistance and social services, and programs for children. Under section 24.3 of the Federal-Provincial Fiscal Arrangements Act, to receive their full share of funding, provinces and territories must meet the sole criterion that no person is required to live in a province or territory for a minimum period before becoming eligible to receive social assistance. The Act also states that the CST is to be provided to finance social programs in a manner that gives provinces and territories flexibility, and encourages federal, provincial and territorial governments to coordinate the development of shared principles and objectives for these social programs.The federal government estimates that it will transfer some $11.9 billion in cash support to the provinces and territories through the CST in 2012–2013, with an additional $9 billion provided through a tax point transfer. The value of the CST cash transfer is determined by a legislated funding formula, in which payments to provinces and territories are provided on an equal per capita basis and are set to grow by 3% annually according to an automatic escalator. The tax point transfer consists of the estimated current value of a transfer of federal personal and corporate income tax points to provincial and territorial governments that occurred in 1977.” So one needs to understand that in the CST the only condition is that provinces must not impose a residency requirement on social assistance. The CST is money allocated from the federal government to the provincial and territorial governments to spend as each province or territory deems necessary to meet the needs of its population in the areas of post-secondary education, social assistance and social services, and programs for children (Department of Finance Canada 2010). EVOLUTION OF SOCIAL TRANSFERS In the 1950s and 1960s, the federal government encouraged the development of nationwide hospital and medical care, and social programmes in support of post-secondary education, social assistance and social services (Gauthier 2012).The evolution of social transfers is as follows: Cost Sharing Program 1960s and the Canada Assistance Plan (CAP) 1966 The CAP was introduced in 1966 and was a 50/50 cost-sharing programme covering eligible expenditures that the provincial and territorial governments sustained in providing social services. It has been stated that “to be eligible for federal funding under the CAP, provinces 38 Devi Roy and territories had to meet specific conditions for social assistance programs, including the use of a “needs” test to determine financial need for individual recipients. CAP criteria also upheld the restriction against provinces or territories imposing a minimum residency requirement for social assistance eligibility (Gauthier 2012)”. The Established Programmes Financing (EPF) Era, 1977/1978 to 1995/1996 In 1977, the EPF was introduced, replacing cost-sharing programmes for health and post-secondary education. With the Canada Health Act of 1984, the EPF funding was made conditional in respect of the five criteria of the Canada Health Act, which are universality, accessibility, portability, comprehensiveness, and public administration (Health Canada www.hc-sc.gc.ca). In 1995, the federal budget announced that the CAP and EPF would be combined into one block fund – the Canada Health and Social Transfer (CHST). The CHST provided funds to the provincial and territorial governments in support of healthcare, post-secondary education, social assistance and social services (Provincial and Territorial Ministers of Health 2000).The new block fund introduced in 1977/78, the EPF arrangements, had unique characteristics: the federal contribution compromised both a cash payment4 and a notional “tax point value”4 (Provincial and Territorial Ministers of Health2000). Thus, EPF was no longer designed to pay one-half of the cost of provincial social programmes, but rather was to provide equal per capita grants to provinces to grow at the same rate as Canadian GDP. In 1990, the per capita grant was frozen and restraint continued and finally in 1996, the federal government announced the termination of EPF grants and the creation of a new block grant to support health, education, and post-secondary education i.e. the Canadian Health and Social Transfer(CHST)(Harvey 2014). Canada Health and Social Transfer (CHST) 1996 to 2003